As­sur­ance­news

Accounting Today - - Assurance -

Dead­line ap­proach­ing for lease ac­count­ing changes

Wash­ing­ton, D.C. — Com­pa­nies are still be­hind sched­ule in get­ting ready for the im­pend­ing lease ac­count­ing stan­dard, ac­cord­ing to a new sur­vey.

Only 43 per­cent of pub­lic com­pa­nies are in the fi­nal im­ple­men­ta­tion stage of de­ploy­ing a tool and mi­grat­ing data for the new stan­dard. For pub­lic com­pa­nies, the new leases stan­dard takes ef­fect for fis­cal years, and in­terim pe­ri­ods within those fis­cal years, start­ing af­ter Dec. 15, 2018, so for a cal­en­dar-year com­pany, it would be ef­fec­tive Jan. 1, 2019.

Com­pared to pub­lic com­pa­nies, pri­vate com­pa­nies are tak­ing full ad­van­tage of the ex­tra year they are be­ing given by the Fi­nan­cial Ac­count­ing Stan­dards Board to re­spond to the new leases stan­dard, known as ASC 842. The sur­vey, by ac­count­ing CPE provider En­coursa and lease ac­count­ing soft­ware provider Lease­query, found that 44 per­cent of pri­vate com­pa­nies are still in the early stages of as­sess­ing their im­ple­men­ta­tion plan.

When they were asked about the most chal­leng­ing el­e­ments of adopt­ing the new stan­dard, ac­coun­tants ranked un­der­stand­ing the new stan­dards as their biggest chal­lenge, higher than bud­getary or staffing con­straints. Liz Brig­g­son, a prac­tic­ing CPA in Michi­gan who is head of part­ner­ships at En­coursa, noted that the re­sponses speak to the com­plex­ity of the new stan­dards. In re­sponse to the com­plex­ity of the new leas­ing stan­dard, the sur­vey found that seven out of 10 pub­lic com­pa­nies are se­lect­ing lease ac­count­ing soft­ware to help them deal with the new stan­dard.

Nearly half the com­pa­nies sur­veyed plan to im­ple­ment the new leas­ing stan­dard with fewer than one to two team mem­bers. “With a lean ap­proach, smartly har­ness­ing tech­nol­ogy will go a long way in as­sur­ing a timely, ef­fec­tive and ef­fi­cient tran­si­tion,” said Brig­g­son.

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